Hasbro Bets On Magic, Mattel Waits For Holiday Rebound

Hasbro (HAS) is positioned for significant growth into 2025, primarily driven by surging demand for Magic: The Gathering trading cards, a trend also benefiting retailers like Target (TGT) which has seen trading card sales up 70% year-to-date. Bank of America highlights this shift is fueled by an expanding player base, wider distribution, and retailers reallocating shelf space from traditional toys due to demographic changes. While tighter retailer inventories are pushing some Q3 revenue into Q4 for both Hasbro and Mattel (MAT), the latter facing a more holiday-dependent outlook, Hasbro's strategic move into faster-growing video games further diversifies its growth avenues.

Analysis

Hasbro is demonstrating significant growth momentum, primarily propelled by its Wizards of the Coast segment and the robust performance of Magic: The Gathering. According to Bank of America analysis, this trend is expected to be the main contributor to 2025 earnings, supported by a strong release schedule and clear evidence of an expanding ecosystem. Key metrics substantiate this growth, with the Wizards Play Network store count increasing by approximately 20% to 9,000 locations since year-end 2024, unique players growing about 40% year-over-year in the first half of 2025, and event attendance climbing. This surge benefits retailers like Target, which has seen trading card sales rise roughly 70% year-to-date and is on track to surpass $1 billion in this category in 2025. This retail shift is a strategic response to declining youth demographics and softer demand in legacy toy categories. In contrast, Mattel's outlook is more constrained, with tighter retailer inventory management pushing revenue expectations into a holiday-dependent fourth quarter, leading to a trimmed Q3 EPS forecast from $1.08 to $1.02. While Hasbro is also affected by these inventory shifts—with consumer products revenue projected to fall 3.5% in Q3 before recovering—its trading card division provides a powerful counterbalance. Furthermore, Hasbro’s forward-looking strategy includes entering the faster-growing video game market with its planned 2026 launch of Exodus, positioning it for long-term diversification.

Key Decisions for Investors

• Investors should view Hasbro's Wizards of the Coast segment as the central thesis for a long position, given quantifiable growth in its player base (up 40% YoY) and distribution network (up 20%), which underpins its 2025 earnings outlook.
• Monitor relative performance between Hasbro and Mattel, as Mattel appears more exposed to near-term headwinds from tight retailer inventories, while Hasbro's momentum in trading cards provides a significant buffer.
• Consider Target's increased allocation to collectibles as a key strategic win, as its 70% year-to-date sales growth in the category is effectively offsetting softness in other retail segments.
• For a longer-term risk assessment on Hasbro, track milestones related to its video game strategy, as the success of titles like Exodus will be critical for diversifying revenue beyond the cyclical collectibles market.